Editor’s note: This story has been updated to reflect a longer time window during which OPRF’s school board has set its tax levy lower than the maximum allowed under Illinois tax cap laws.
On April 27 the Oak Park and River Forest High School District 200 school board will vote on how to fund Project 2, an approximately $102 million plan to demolish and rebuild the southeast corner of the high school to modernize physical education facilities and build a new swimming pool to replace two nearly 100-year-old pools. The school board likely will decide to avoid a referendum and fund the project using $44.2 million in cash reserves and borrowing $45.3 million by issuing debt certificates that are repaid out of the district’s operating fund along with getting at least $12.5 million in private donations.
One Oak Park resident thinks he has a better and fairer way to pay for Project 2. Kevin Peppard, something of a gadfly in Oak Park affairs, but very knowledgeable about school finance, has an innovative idea that he has been presenting to the school board and the school’s Community Finance Committee for months. Peppard, a 1966 OPRF grad who earned an MBA from the University of Michigan in 1974 with a concentration in finance and worked in the corporate world before returning to Oak Park in the late 1980’s, contends that funding Project 2 with cash reserves gives a windfall to future beneficiaries of Project 2 and shortchanges those taxpayers who have been, in his view, overtaxed for the last 20 years allowing OPRF to build up cash reserves in excess of $100 million.
Peppard, whose father was once president of the OPRF school board, proposes what he calls a tax giveback and bond swap. He calls on OPRF to pay for Project 2 by borrowing the entire amount of the cost, except for that contributed by private donors. He says that the school board should commit to returning $51 million in cash reserves to taxpayers once a referendum is approved which is possible under Illinois law. He calculates that returning $51 million to taxpayers would amount to the district sending a $3,155 check to the average property taxpayer in District 200.
Tom Cofsky, president of the OPRF school board, says that while Peppard’s proposal sounds good in theory it has some practical problems. He notes that some of those taxpayers who have helped build the massive reserve fund no longer live in the district so they would not get any money back.
“In concept it might sound good but you’re refunding money and is it really fair, is it getting to the people who really paid for it,” Cofsky said.
This swap, Peppard contends, would place the cost of Project 2 where it belongs, on future users of the new facilities not on those who have been overtaxed for the past 20 years, many of whom no longer have children who would benefit from the improvement in the high school. Peppard says it’s a matter of intergenerational equity.
“The reason you ought to bond this stuff is to pass the costs down to the people who will actually benefit so they share in actually paying for it,” Peppard said.
Peppard points to Naperville Community Unit School District 203 which returned approximately $10 million in budget surpluses to taxpayers in 2021.
The Peppard proposal would put more of a burden on current and future taxpayers than any of the other financing scenarios the school board is considering. He estimates that borrowing $90 million would cost the owner of a home worth $500,000 an additional $302 in additional taxes annually for 20 years.
Elizabeth Hennessey, the district’s financial advisor, puts the cost of Peppard’s proposal higher. When analyzing Peppard’s proposal Hennessey assumes the district would need to borrow $95.5 million to take account of the additional cost for Project 2 that a one-year delay caused by a referendum would result in. Peppard disputes that referendum would require a one-year delay in the start of the project.
Hennessey estimated that the annual tax increase on $95.5 million in referendum bonds would be $426 a year.
Peppard says the inducement of an immediate windfall of more than $3,000 to the average property taxpayer in District 200 would all but guarantee that the bond referendum passes. He likens it to a shotgun wedding.
Cofsky has said at a recent school board meeting that the school board has already reduced the tax burden on existing taxpayers in recent years by not levying as much in taxes as was allowed by law.
Since 2013, the district has left $67 million in the hands of taxpayers by not levying as much as permitted by the tax cap law, says Karin Sullivan, the school’s communications chief.
Furthermore Cofsky says that borrowing so much money now could hamstring the district in the future as it looks to other stages in the Imagine Plan to continue to renovate and modernize OPRF. He says that borrowing $90 to $100 million would put the district at about 55 percent of its legal debt capacity.
“I want to be forward looking here and we’ve got to look to say what can we do to assure that we can take care of our district and facilities into the decades to come,” Cofsky said.
